Option Bulls Step Into McDermott International

McDermott International has been churning sideways for months, but now the bulls are stepping into the oil-services name.

OptionMonster's real-time systems detected heavy trading in the March 13 calls, with about 5,000 contracts going for $0.45 to $0.60. These are in a new expiration month that just opened on Monday, so there was no real open interest in the strike.

The calls lock in the entry price investors must pay to buy the underlying shares. As a result, these options can deliver major leverage if the stock rallies but will expire worthless if it doesn't.

McDermott dropped sharply last August and has been trapped between $10 and $14 since then, below its 200-day moving average near $16. McDermott, an engineering company that builds and manages complex offshore oil and gas projects, was downgraded to “neutral” by Goldman Sachs last week with a $13 price target.

McDermott shares closed at $11.94 yesterday, down 0.67 percent. Overall option volume in the name was nine times greater than average in the session as calls outnumbered puts by 17 to 1.